Specialist Insurance Services to the Private Equity Sector. Insurance for your reputation

Transcription

1 Specialist Insurance Equity Sector Insurance for your reputation

2 Introduction: The need for Specialist Insurance Advice Private equity investment has grown considerably in popularity in recent years, especially since the worldwide banking crisis. It has also become increasingly accessible to a wider range of new investors, encouraged by Government schemes providing taxation incentives to invest. However, private equity investment remains a high-risk activity. In an increasingly litigious age dominated by a culture of blame and regulation, professional advisers, managers and executives are vulnerable to claims by aggrieved claimants who have suffered financial losses, especially from those who lack the experience of the professional investors who traditionally form the bedrock of this sector. Private equity specialists are therefore in need of insurance cover to protect them against such claims. In many cases, this will also be a regulatory requirement. In spite of the recent increase in private equity activity, the sector remains a mystery to many insurance professionals. Professional business exposures tend to be pigeon-holed into the Professional Indemnity, Directors & Officers and Financial Institution insurance markets, whereas the activities of private equity professionals cut across these artificial lines of demarcation and require individual and careful consideration. This is where MFL can help. With our specialist knowledge of Private Equity & Venture Capital professional and managerial liability exposures and our experience of handling the insurances of a wide range of clients in the sector, we are perfectly placed to advise you on your commercial insurance needs and requirements. Registered in England No Registered Office: Barlow House, Minshull Street, Manchester, M1 3DZ T:

3 Specialist Insurance Equity Sector MFL: What we do MFL is a specialist Insurance Broker to the private equity sector. Our services draw on our extensive knowledge and understanding of the professional, managerial and financial risks associated with the processes of private equity and venture capital investment, advising our clients on appropriate and comprehensive insurance protection to protect them against such risks. Contact our PE specialists Jonathan Leese Director T: E: jonl@m-f-l.co.uk John Jones Development Executive T: E: johnj@m-f-l.co.uk We also offer exclusive and innovative insurance solutions to investee companies, including our Early Stage Solutions programme for the Science & Technology sector. MFL: How we do it: Our clients requirements are managed by an Account Director, who will visit you in person to identify your exposures, gathering the underwriting information necessary to enable us to present your proposal to insurers, and to report back to you with suitable quotations and recommendations. The Account Director acts as your adviser and relationship manager at all times. Our Account Directors are supported by an experienced and knowledgeable team of brokers with strong negotiating skills and relationships in this rather specialist insurance market. When claims arise, our team of internal specialist claims handlers are also on hand to guide you through the often complex and sensitive claims process, seeking to protect your interests vis-à-vis both claimants and insurers alike. We would very much welcome the opportunity to talk to you about how we might work together. Should you wish to explore your own individual insurance needs and requirements, please contact one of our specialists for an initial discussion. T: Registered in England No Registered Office: Barlow House, Minshull Street, Manchester, M1 3DZ

4 Solutions for: Professional Indemnity Directors & Officers Insurance Specialist Insurance Equity Sector - Claims Scenarios Crime Insurance Cyber Liability Office Insurance Commercial Insurance Packages for Investee Companies IPO Insurance Warranty & Indemnity Insurance Intellectual Property Insurance Professional Exposures Private equity and venture capital investments involve a number of professional disciplines, all of which may be vulnerable to claims for professional negligence in the event of financial loss: Investors in a private equity fund will often rely on an Information Memorandum as the basis of their decision to invest. If the information in the IM is held to be misleading or inaccurate, claims may be made against those responsible for its content. Claims may also arise against the investment managers if an investment has been made outside the stated parameters in the IM and has subsequently performed poorly. Claims for professional negligence may be made for mismanagement of the fund, including inadequate due diligence of potential investment targets and inappropriate or unsuitable investment recommendations or decisions made by the Advisory Committee or Fund Manager. Claims may arise further down the line from disputes regarding the valuation of investee companies, exit strategies or potential conflicts of interest on sale. Corporate Governance Exposures Personal liabilities for managerial/trustee responsibilities may also be incurred by the directors and officers of the private equity advisers, managers and administrators either in their primary roles for their private equity/venture capital firms or in their roles as directors of fund entities, or investee/portfolio companies: Liability for breach of fiduciary duty in their role as directors and officers, including responsibility for wrongful trading, company mismanagement or claims by creditors for the debts of the company in the event of insolvency. Allegedly negligent advice provided to the management team of portfolio companies (such claims are often based on both professional and managerial liability). Individual responsibility for the content of an IM, including the documentation prepared for the purposes of an exit via an Initial Public Offering (IPO). Personal liabilities arising from claims for breach of trust against trustees of funds established on such a basis. Crime & Financial Exposures The management and administration of private equity investments also carries with it exposure to potential fraudulent activity, either by the parties involved in the process or by external fraud, particularly through computer systems and the internet. In addition, cyber activity can give rise to exposure to third party liability to others as well as significant costs arising from interruptions to businesses. Registered in England No Registered Office: Barlow House, Minshull Street, Manchester, M1 3DZ T:

5 Specialist Insurance Equity Sector - Clients Who we do it for: Private Equity Clients MFL offers a fully bespoke service to the full range of professionals involved in Private Equity & Venture Capital investments. Our specialist knowledge enables us to tailor specific insurance solutions to the professional, managerial and administrative activities of all those involved in this rapidly evolving sector. The Insurance Solutions Our skill in broking insurance proposals from private equity businesses is to blend together the strengths and attributes of insurers in the Professional Indemnity, D&O, Financial Institution, Technology and Crime markets to tailor-make the most appropriate solution for our clients. Our attention to detail ensures that the legal liability and financial exposures of all parties involved, both corporate and personal, are protected by means of an insurance programme backed by high quality insurance providers. Our services also extend to the private equity investments themselves, particularly in relation to EIS and SEIS Funds, where the lack of a track record can sometimes be off-putting to insurers. MFL s Early Stage Solutions programme is designed specifically to cater for the needs of start-up or developing businesses in the science and technology sectors, providing comprehensive protection at affordable prices for tight budgets. Our clients include the following: Fund Managers Venture Capital Trusts Limited Partnerships Crowd Funders Investment Advisers In-house legal counsel Promoters, Designers, Issuers & Operators Directors & Officers of PE/VC Firms, including directorships in investee companies Corporate Finance Advisers External Advisers to the sector (e.g. solicitors, accountants, compliance consultants) Investee Companies T: F:

6 MFL Affinity INSURANCE BROKERS T: F: Web: McParland